The Psychology Behind Frugal Living: Part 3

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The Psychology Behind Frugal Living is a mini-series that explores the psychology behind how frugality can help you live the life of your dreams, how to overcome fear of what others think of your frugality, and how to develop frugal habits effectively.


In Part 1 of this series, I explained that a frugal lifestyle is the most effective way to save up a significant amount of money in a relatively short amount of time. Doing so will give you the financial means to transition to a lifestyle that provides you with more freedom and happiness.

In Part 2, I described how to overcome the fear of what others will think of your frugality.

In this final part of the series, I explain the psychology behind forming habits and how understanding this psychology can help you develop frugal habits more effectively.

Higher Frequency = Less Thought

When you wake up in the morning, odds are you have some type of routine. You might check your phone. Maybe go to the bathroom. Make some coffee. Check your phone again. Get dressed. Feed the dog. Eat a bagel. Brush your teeth. Head out the door. Drive to work.

You probably do all of this without any high-level thinking or complex strategizing. Instead of focusing on how or why you’re doing any of these things, you just do them. Why?

Because of habit. And our brains love habits.

While brushing your teeth in the morning, your mind is probably wandering off thinking about what work will be like, what you’ll have for dinner, or what you’ll do this weekend because the actual action of brushing your teeth is so familiar that it doesn’t require thought or attention.

In his book The Power of Habit, Charles Duhigg explains how our brains act once we start doing a task more and more often:

“In fact, the brain starts working less and less…The brain can almost completely shut down. … And this is a real advantage, because it means you have all of this mental activity you can devote to something else.”

The more we do something, the less brain power it requires to do it.

This is the exact trick you can use to develop virtually any habit. 

Let me explain.

Taking the First Step

Let’s suppose you want to start saving money by packing your lunch instead of eating out each day at work. After all, it can save you $1,500 per year (which cuts the amount you need to save to reach F.I. by $37,500…but I digress).

Here’s what probably goes through your head when you have this idea:

I could save a bunch of money by packing my own lunch…but that would take so much time. I don’t even know what I would pack. It would be a hassle. What would my coworkers think? I don’t want to be weird. It’s easier to keep buying. I’ll just save money some other way.

Whenever we think of doing a task that is new or foreign to us, our brain jumps in and throws a million reasons in our face about why it will be too difficult.

The hardest step in developing a new habit is the first. To take the first step, we have to overcome the dread of trying something new. We have to acknowledge that this new task we set out to do will be uncomfortable and weird at first. We have to recognize that we’ll make newbie mistakes when we first start. But the good news is, once we do this task once, each time afterwards will be even easier and more natural.

Knowing this, here’s how you can develop the habit of packing your lunch:

Week 1

Action: Check out some YouTube videos on how to plan out “meal-prepping”. Go to the store and buy your food in bulk. Come home, watch another YouTube video on how to cook the food in bulk. Cook the food and place it in sealed containers for each day of the upcoming week.

Thoughts in your head: I think I burnt the chicken. I didn’t have enough containers. The steamed veggies turned out decent though. That didn’t take as long as I thought. 

Week 2

Action: Same as week 1, but this time you know what worked and what didn’t. You know how to cook the food a little better, what portions to use in the containers, and how long the whole process will take. 

Thoughts in your head: Hey the food isn’t burnt. Cool, I have enough containers. That took even less time than last week. 

By time weeks 3 and 4 roll around, your brain will already be forming new connections that make this habit even easier to continue. You’ll need even less motivation to meal-prep because it’s already becoming second nature. What was weird in week 1, and only a little unnatural in week 2, is already becoming normal by weeks 3 and 4.

This is the nature of developing habits. Just force yourself to try it once. Then twice. Then each time afterwards become easier and and requires less motivation to maintain the habit. Over time, packing your lunch turns into your “new normal”.

Woah Woah Woah…One At a Time Please

The key to developing frugal habits is to pick one at a time and slowly work it into your daily routine. For example, you could choose to develop one frugal habit per month and by the end of the year you would have a drastically higher savings rate, while maintaining your same perceived quality of life. Here’s what that might look like:

January: pack your lunch

February: make your own coffee (using a keurig or other means)

March: find a cheaper alternative to cable (Netflix and Hulu are great)

April: find a cheaper phone plan (I use TING)

May: do a whole month of no spending on clothing

June: do a whole month of no spending on entertainment (embrace the outdoors)

July: do a whole month of no dining out

August: have a yard sale, sell some old crap

September: experiment with new ways of getting to work without a car

October: start a 529 savings plan for your kids or open an IRA for yourself

November: call one company per week and negotiate a monthly bill you pay

December: cut your own hair (mistakes will be made – laugh it off)

By the end of the year you’ll be saving significantly more money than you could ever imagine, all without sacrificing your quality of life. By choosing just one frugal habit to focus on per month, you’re slowly working money-saving habits into your daily routines and inching up the savings rate ladder.

The Secret Behind High Savings Rates

Slowly developing frugal habits over time is the secret to obtaining a high savings rate without feeling like you’re “depriving” yourself.

Just as lifestyle creep may have caused you to go from being a broke college student to living in a 3,000 square foot suburban house with 2 SUV’s and 4 TV’s, you can inch down the lifestyle ladder through the power of frugal habits and still maintain the same level of happiness.

So get out there and start building some new frugal habits. It will be uncomfortable and awkward at first, but that’s a good sign. It means it’s working. One year from now you’ll be a champ at lifestyle experimenting, you’ll have plenty of beneficial frugal habits in place, and most importantly you’ll be saving more money than you ever thought you could. 


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2 Replies to “The Psychology Behind Frugal Living: Part 3”

  1. Thanks for sharing this 3 part series, Zach! It’s motivation for me. I’ve recently noticed how cutting back on lunches and bringing coffee to work instead of buying can become easier over time. Like you said, it’s about forming habits. You’ve left me with a few more ideas to increase my savings rate. I’m saving 21% right now, but that’s not going to allow me to reach FI fast enough. Thanks for the ideas. Hope you’re having a great week.

    1. I’ve personally found that habits are the single best way to change my behavior over time and reduce my spending without even feeling like I’m spending less or depriving myself. I’m glad you found some of the info useful and I hope you can use it to increase your savings rate more and more! Best of luck in your journey Graham 🙂

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